What Has Your Rent Done for You Lately? Why Buying a Condo Might Make Sense

buy vs. rentBy Christy Kim, Redfin real estate agent in Seattle

If you’ve been doing the math on renting versus owning, you may realize that now is a good time to consider buying a condo or house in many cities. Among the largest U.S. markets, Seattle saw the biggest increase in rents in 2013. Rents rose 7.1 percent from the year before, as compared with the national average, which rose only 3.2 percent over the same time period, according to the Associated Press.

In Ballard, which was named the hottest neighborhood in Seattle by Seattle Met magazine, buying a condo may make sense. A condo purchase means a fixed monthly mortgage payment, rather than constant worry about potential rent increases.

Many buyers decide to purchase a condo because they see rents rising and realize that buying a condo is a smarter investment, particularly in the long run. The monthly costs of renting and owning can be quite comparable. For instance, at Solo Lofts, a condo building that is breaking ground soon in downtown Ballard and is listed by Redfin, units start at $249,000. Depending on a buyer’s down payment, it may even be more affordable to purchase than to rent.

And at just 20 units, Solo Lofts is a boutique community in comparison with the larger apartment buildings in the neighborhood.

Historically, condos in Ballard have had solid long-term appreciation. Over the past 15 years, condos in the neighborhood have appreciated at an annual rate of 5.62 percent, which is identical to the rate of appreciation for single-family homes in the area. Condos in Ballard are also currently 7 percent cheaper per square foot than single-family homes in the neighborhood, according to Redfin data.

Check condo prices in other cities where rents are rising, including San Francisco and Washington, D.C.

But it’s not just about the money. Owning a condo has other lifestyle benefits. While apartment complexes have transient residents frequently moving in and out, condo owners are more likely to invest in building a community. Apartments are managed by corporate entities or a landlord, while condo buildings are managed by the homeowners association. And if you’re a pet lover, consider that some rental properties have pet fees and breed restrictions. In a condo community, pets are family, too.

If you want to learn more about condos, or the buying and selling process, check the Redfin event schedule for upcoming classes in your area.

Christy Kim Redfin About Christy Kim, Redfin
With more than eight years in real estate, I understand that building relationships and listening are the key aspects of my job. I educate my clients so that they become empowered buyers and make good decisions, and ultimately get into their dream house! My commitment to you is exceptional customer service, continuous communication and to accept all challenges as an opportunity to provide the smoothest transaction. As an investor, I bring unique perspective to all real estate transactions and knack for finding great deals. Whether you are looking for your first home or an investment property, I can help!

Discussion

  • ak123

    Hahaha,

    This isn’t from a shill? Ms. Kim hints that you will bet 5.62% appreciation. In your dreams. Watch what happens when interest rates get even to 5% from the 4.3% they are at. Say bye bye to appreciation. No one will be able to buy at the pie-in-the-sky “appreciated” price you want.

    Just to reiterate my previous counter to the misconclusions above:

    1) even in a low property tax state like California, with even the current low interest rates, the first 25K each year you spend on a $600,000 house will go to taxes, mortgage interest and maintenance. So much for the equity myth outlined above.
    2) investing in stocks and bonds have always yielded a better return than on real estate. Now is no different.
    3) every time you transact, you lose 10% on a house on realtor fees and other costs.
    Don’t believe the hype you are reading here. A home is a place to live and, at best, forced savings as an investment. The math doesn’t really add up at today’s inflated prices but these guys are desperate for business.

    • evergreen16

      Keep renting, buddy! There a lots of smart people that will rent you their investment property.
      I’m not gonna waste energy on correcting your three points, because let’s face it – your opinions benefit a lot of other people.

      • ak123

        Haha. Keep fixing those toilets and looking for tenants for that 3% yield while I put that $30,000 a year I am saving in treasury’s that yield the same. Experienced investors rarely talk about residential real estate as an investment. Too funny.

  • ak123

    Oh, and for Mr. Kelman and Ms. Kim,
    It’s time to pray for another housing correction, not “appreciating” prices. Sure, volumes will drop for two to three years for you, but in the end, there will actually be a housing market.
    As it stands right now, your industry is dead in the water because prices are too high. You just refuse to acknowledge the elephant in the room.

  • evergreen16

    I can confirm situation in Seattle. As long as mortgage + taxes + fees are lower than rent, and especially when the demand for housing is there, that is the only reasonable thing to do.

    • ak123

      Let’s talk in two years.